Economic Data looking up a bit!

Initial Jobless Claims were a huge positive surprise, totaling just 407k, well below expectations of 435k and down from 441k last week. The last time we saw a level this low was July ’08 and it brings the 4 week average down to 436k from 444k. Continuing Claims fell by 142k and Extended Benefits fell a net 262k. Bottom line, there is a clear improvement in the level of firings, and thus those applying for benefits, and we’ll see with next Friday’s Nov Payroll # how much new net hiring has followed. 

The 2nd and final look at Nov U of M confidence was 2 pts better than thought at 71.6 and up from the initial reading of 69.3 out a few weeks ago. It’s the best level since June and up from 67.7 in Oct. Both Current Conditions and the Outlook rose a bit more than 2 pts. One year inflation expectations were 3%, up from 2.7% in Oct but holding steady with the preliminary Nov report. That is the highest since May. There is no better driver to consumer confidence than comfort in one’s job and maybe the fall in initial claims is a clear sign that the labor market is getting better and the consumer is beginning to feel that. With this said, we’ll get labor market net hiring data next week with the ADP report and Payrolls and they will help to quantify to what extent.

---Peter Boockvar, here and here

Update:  Mark Thoma: before we get too overconfident, we should also note the other news today

New orders for manufactured durable goods in October decreased $6.8 billion or 3.3 percent to $196.0 billion, the U.S. Census Bureau announced today. This decrease, down two of the last three months, followed a 5.0 percent September increase. Excluding transportation, new orders decreased 2.7 percent. Excluding defense, new orders decreased 2.1 percent.

That’s the largest drop since March of 2009. Thus, while the drop in unemployment claims is good news, overall the news is mixed and it’s not yet clear — at all — that our troubles are over.